A personal loan can be a helpful way to cover a big expense, consolidate debt, or handle an emergency. But most borrowers don't realize just how much the laundry list of fees can change the actual cost of their loan.

Looking for a secure place to grow your savings? See our expert picks for the best FDIC-insured high-yield savings accounts available today - enjoy peace of mind with competitive rates.

And as someone who's written about personal finance for years -- and is now looking into a personal loan himself -- I can't emphasize the importance of reading the fine print enough.

Here are the biggest traps to watch for before you sign on the dotted line.

Origination fees eat into your loan amount

The biggest and most important fee you'll see on your personal loan is an origination fee, which is typically taken out of your loan before you even receive the money.

Origination fees usually range from 1% to 10% of the total loan amount, depending on factors like your credit score and the amount of your loan. That means if you take out a loan for $10,000, for example, you may actually get as little as $9,000 -- but you'll still have to repay the full $10,000, plus interest.

For this reason, you'll want to check how much you'll actually get from your loan after the origination fee. If you need a specific amount of cash, you may have to borrow more than expected to cover it.

Ready to calculate how much you'll need? Check out our list of the best personal loans to save on fees today.

Hidden fees can add a lot to your loan

The interest rate you're shown on your loan -- also called the annual percentage rate, or APR -- is supposed to reflect the true cost of the loan, including most fees. But in practice, lenders don't always make every charge easy to spot.

Lenders often tack on extra fees for things like processing or application charges, late payments, returned checks, or early payoff penalties. Yes, you read that right: Lenders will actually make you pay more for repaying your loan early, because charging interest is how they make money.

Altogether, these fees can quietly add as much as 10% to the cost of your loan. Make sure to read through all of the loan terms and ask for a full breakdown of every potential fee before agreeing to anything.

Look out for other potential pitfalls

Lenders are required to give you full loan terms in writing, but it's up to you to read them. Watch for things like variable interest rates that may increase over time, as well as mandatory insurance or other add-ons that increase your monthly payment.

Autopay setups are common, too, and can be convenient -- but they can also be risky if you forget to account for them in your budget, leading to potential overdraft or late fees.

If anything doesn't make sense, ask. A good lender will explain everything in plain English.

Looking for a lender you can trust? Check out this list of our favorite personal loan lenders.

Avoid "guaranteed approval" and upfront payments

Some online lenders or loan "brokers" advertise guaranteed approval or ask for an upfront payment before you get your loan. These are major warning signs.

Legit lenders will never ask you to pay before you receive your funds. And no one can guarantee approval without checking your income and credit.

If you're ever unsure, you can check if the lender is registered in your state or search for complaints through the Consumer Financial Protection Bureau (CFPB) or Better Business Bureau (BBB).

How to protect yourself

Here are a few beginner-friendly tips before taking out a personal loan:

• Compare at least three lenders side by side
• Read the full disclosure and fee breakdown on each
• Use a loan calculator to see your true repayment cost
• Check reviews and ratings from trusted sources

And if the terms seem too good to be true, trust your gut. The best personal loans are transparent, affordable, and clear about what you're getting into.

By watching for fees, reading the fine print, and avoiding shady lenders, you can borrow safely while staying in control of your finances.

Alert: highest cash back card we've seen now has 0% intro APR into 2026

This credit card is not just good – it's so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

I've covered personal finance for years, and lately I've noticed more savvy borrowers skipping balance transfer credit cards and choosing personal loans instead to tackle credit card debt.

Looking for a secure place to grow your savings? See our expert picks for the best FDIC-insured high-yield savings accounts available today - enjoy peace of mind with competitive rates.

It comes down to getting more control, locking in predictability, and sometimes saving more money in the long run.

If you're trying to decide between these two debt payoff options and the reasons below make good sense to you, then a personal loan might be the right solution for you, too.

1. Lower rates without the promo deadline stress

Balance transfer credit cards lure people in with 0% intro APR offers. If you can pay off your balance within the promotional window -- often 12 to 21 months -- you can save a lot on interest. But if you don't pay it off in time, you could get hit with a much higher rate when the promo ends.

Personal loans can give you a competitive fixed rate that doesn't expire, especially if your credit is solid. This means you know exactly what your payment will be each month until the debt is gone, with no surprises.

Thinking about a personal loan? Many top lenders let you check your rate with no impact on your credit, so you can compare side-by-side with balance transfer offers.

2. A clear payoff date you can actually plan around

One of the biggest challenges with credit card debt is that it's open-ended. Even with a balance transfer card, it can be tempting to continue using the card or rolling your debt to a new promo when the old one ends, which drags out your payoff timeline.

A personal loan comes with a clear repayment schedule -- typically two to five years -- and a set monthly payment. You can circle the date your debt will be gone on your calendar and build your budget around it. That structure can help you stay on track and avoid carrying debt year after year.

If you've struggled to pay down your credit cards or you're tired of juggling due dates, the simplicity of a personal loan might give you the mental breathing room you need. Many top lenders let you check your rate with no impact on your credit, so you can compare side-by-side with balance transfer offers. Visit our best personal loans page now.

3. Flexibility to tackle more than just credit card debt

Balance transfer cards are limited to credit card debt, but personal loans can help you consolidate multiple types of high-interest debt. If you have medical bills, payday loans, or even personal expenses you put on high-rate credit cards, a personal loan can combine them into one payment at a potentially lower rate.

This can help you streamline your monthly bills while working toward becoming debt-free. You won't need to juggle multiple due dates or worry about missing a payment on one of your cards, and the consistency can help you build momentum on your financial goals.

Ready to see if you qualify for a personal loan? It generally only takes a few minutes to check your potential rate online, and it could save you money compared to sticking with credit cards. Start by checking out our best personal loans page now.

Why it might be worth comparing your options now

If you're carrying high-interest credit card debt, you have options -- and exploring them now could put you in a stronger financial position for the rest of the year.

Balance transfer cards can be a great tool if you're confident you can pay off your debt before the promo ends, but they're not your only option. A personal loan could give you a lower fixed rate, a predictable payment schedule, and a clear debt-free finish line.

Alert: highest cash back card we've seen now has 0% intro APR into 2026

This credit card is not just good – it's so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.